TSX set to advance on unexpected rise in key China manufacturing index | iNFOnews | Thompson-Okanagan's News Source

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TSX set to advance on unexpected rise in key China manufacturing index

The Toronto Stock Exchange Broadcast Centre is shown in Toronto on June 28, 2013.THE CANADIAN PRESS/Aaron Vincent Elkaim
August 01, 2013 - 5:39 AM

TORONTO - The Toronto stock market headed for a positive session and commodity prices advanced amid a surprise improvement in China’s manufacturing sector.

Traders also digested big losses handed in by two major gold miners and an announcement from TransCanada Corp (TSX:TRP) that it is going ahead with its Energy East pipeline project to transport crude oil to Canadian refineries and export terminals.

The Canadian dollar was ahead 0.22 of a cent to 97.13 cents US.

China's official purchasing managers index hit 50.3 last month. That is up only slightly from June’s 50.1 reading but economists had expected a modest decline to below 50, the level which divides contraction and expansion.

However, analysts note that the index has held between 49 and 51 for the past 15 months.

"Moreover, some market participants might view this report with some suspicion given the weakness in the private sector HSBC manufacturing PMI which was unrevised at 47.7, and has held sub-50 for three straight months," observed BMO Capital Markets senior economist Benjamin Reitzes.

The China data also boosted U.S. futures, as did Wednesday’s statement from the Federal Reserve, which wrapped up its two-day meeting without any change to its monetary policy that has supported the economy by keeping interest rates ultra-low. That, in turn, has encouraged lending and spending and also boosted stock markets.

The Dow Jones industrial futures ran up 114 points to 15,547, the Nasdaq futures gained 20.8 points to 3,103.8 while the S&P 500 futures were ahead 12 points to 1,692.5.

There has been much speculation over the last two months about when the Fed might start to wind down a key element of stimulus, its US$85 billion of bond purchases every month.

Traders believe that the central bank could move on tapering its purchases as early as its next meeting in September.

In earnings news, Barrick Gold Corp. (TSX:ABX) posted a US$8.56 billion loss and lowered its quarterly dividend in the wake of lower prices for bullion and copper. Excluding unusual items, Barrick had adjusted earnings of US$663 million or 66 cents in the quarter ended June 30 _ better than the analyst estimate but down from 82 cents per share last year.

Kinross Gold Corp. (TSX:K) reported a net loss of $3.2 billion for its latest quarter, as it was also hit with a substantial impairment charge related to lower gold price assumptions and suspended its dividend. The earnings amount to a loss of $2.81 per basic and diluted share, compared with a profit of 13 cents in the second quarter of 2012. On average, analysts had been expecting a loss of $394.20 million, or six cents a share, on revenue of $961.04 million

And transport giant Bombardier Inc. (TSX:BBD.B) said it had adjusted net income totalling US$158 million in the third quarter, equivalent to nine cents per share and in line with analyst estimates. Bombardier’s revenue was about US$300 million higher than last year, rising to US$4.4 billion, slightly better than the estimate of US$4.34 billion, but the adjusted earnings were down slightly from the second quarter of 2012.

Commodity prices advanced in the wake of the Chinese data with the September crude contract on the New York Mercantile Exchange up $1.91 to US$106.94 a barrel.

Copper added to Wednesday’s eight-cent rise, up five cents to US$3.17 a pound.

December bullion in New York was ahead $12.10 to US$1,325.10 an ounce.

Traders also turned their attention to the release of the U.S. non-farm payrolls report coming out Friday. Economists looked for the data to show that the economy created about 190,000 jobs during July.

European bourses were higher while the European Central Bank left its benchmark interest rate unchanged at a record low of 0.5 per cent as the bank held off on further efforts to stimulate Europe’s lagging economy. The economy of the 17 European Union members that use the euro shrank 0.2 per cent in the first quarter, the sixth quarterly decline in a row.

Also, the Bank of England kept its monetary policy unchanged amid signs that the recovery in Europe’s third largest economy is gaining momentum. The bank confirmed it was leaving its main interest rate at 0.5 per cent and would not pump more money into the economy.

London's FTSE 100 index edged up 0.08 per cent, Frankfurt's DAX rose 1.27 per cent while the Paris CAC 40 gained 0.59 per cent.

Earlier in Asia, Japan’s Nikkei 225 index gained 2.5 per cent, Hong Kong’s Hang Seng advanced 0.9 per cent, the Shanghai Composite Index rose 1.8 per cent while South Korea’s Kospi added 0.4 per cent.

News from © The Canadian Press, 2013
The Canadian Press

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